New Fiscal Regime for Seasonal Rental Property Owners in France
The Le Meur Law, which came into effect in November 2024, has significantly altered the landscape for seasonal rental property owners in France. One of the primary consequences is a change in the applicable fiscal regime for certain landlords.
Impact on Unrated Tourist Properties
Owners of unrated tourist properties generating over €15,000 in rental income in 2025 will be required to declare their earnings under the "actual" (régime réel) tax regime starting in spring 2026. They will no longer be eligible for the simplified BIC (benefits of industrial and commercial profits) regime, which applies a fixed deduction to rental income.
Preparing for the Transition
It is crucial for affected property owners to begin preparing for this change well before 2026 to avoid potential financial penalties.
Understanding the Actual Regime
Under the actual regime, landlords can deduct all valid expenses and amortize the value of their property against their taxable income. However, all expenses must be supported by appropriate documentation, such as invoices.
Risks of Not Preparing
Property owners who are accustomed to the simplicity of the BIC regime face the following risks if they fail to prepare for the transition:
- Difficulty obtaining invoices and gathering supporting documentation for expenses
- Potential financial losses due to undeducted expenses
- Increased risk of tax audits and penalties due to errors in reporting
Immediate Action Steps
To ensure a smooth transition, property owners should take the following steps immediately:
- Meticulously collect all receipts and invoices for expenses related to their rental activity.
- Familiarize themselves with the actual regime and the process of property amortization.
Benefits of the Actual Regime
While the actual regime requires more diligence, it offers the potential for significant tax savings. By deducting expenses and amortizing the value of their property, landlords can reduce their taxable income. This can result in lower tax liability and increased profitability.
Conclusion
The Le Meur Law represents a significant change for seasonal rental property owners in France. By understanding the new fiscal regime and taking proactive measures, owners can mitigate potential risks and maximize the financial benefits of their rental operations.
Additional Tips:
- Consult with a tax professional or accountant to ensure compliance and optimize tax savings.
- Keep accurate records of all income and expenses throughout the year.
- Use rental management software or online platforms that can assist with expense tracking and reporting.
- Be prepared to provide documentation to support expenses if audited by tax authorities.
- Stay informed about any updates or changes to the actual regime as they may arise in the future.
